Extending our classroom to the world!

Ethics

One of the repeated topics we talk about in class is globalization and how it helps companies in a variety of different aspects of their business, such as improved products and operations, as well as reducing costs. However, what if globalization impacted a company negatively? That is exactly what happened to JanSport Apparel. JanSport previously supplied Cornell University with all of its branded school attire. Everything was going well, until a group of students, led by the group United Students Against Sweatshops, boycotted the apparel company and demanded that the university cut ties with the clothing company over its factory safety, or lack thereof. VF Corp., which owns JanSport, did not sign the “Accord on Fire and Building Safety in Bandladesh, [which is] a set of standards for improving factory safety in the country.” Of course, VF claims that their factories are safe and has instead joined the Alliance for Bangladesh Worker Safety.

The Alliance has a smaller population than the Accord, only 26 American and Canadian companies as opposed to 150 companies, but they do not necessarily have the same standards. Factory workers in the Accord, for example, “[have] a broader role in factory reviews.” According to the Alliance, though, “[it] has a Board Labor Committee that advises on the group’s efforts, [and] to imply that workers are not at the heart of our initiative is a direct contradiction of the facts.” The Alliance is also a smaller operation than the Accord because the Alliance inspected only 600 of its members’ companies, as opposed to the 1,100 factories inspected by the Accord.

Cornell University is not VF’s only concern. Prior to Cornell terminating their contract with VF, fourteen other universities, including schools with huge populations such as Arizona State, Penn State, and Syracuse have already terminated their contracts with VF due to the incidents that occurred in late 2012 to early 2013. During that time, a garment factory collapsed and killed over 1,100 workers, and another fire killed 112 workers. The incidents put Bangladesh factories on the international news and created an international movement in order to protect the country’s factory workers. Bangladesh factories supply some of the world’s largest clothing companies and is the “second-largest garment exporter in the world.”

This relates directly back to our class discussion. We always talk about the positive impacts of globalization, and there are certainly ways to globalize in an efficient, safe manner. However, with globalization come certain risks. International companies do not have control of their factories anymore. Instead, they are relying on managers in foreign countries to make sure their goods are being made and the manufacturing process is being executed in a safe, reliable manner. Some of these managers, though, do not always make the best decisions regarding their employees, but instead base their decisions on the bottom line and their productivity.

Would you consider boycotting a clothing company if you heard they were treating their factory workers poorly, or another incident in a factory occurred? What should American companies that export their labor do to ensure that their factories are safe and their employees are taken care of? How do you think these incidents would be handled in the U.S.?

Imagine you have a 10 page paper due at midnight and you’re almost finished, you are starting to feel relieved and BOOM! Your computer crashes! What do you do? Who do you blame for it? I am sure many of your first reactions after crying all night is to take it back to where you purchased it from, and ask them to diagnose the problem. You don’t actually care what the problem is and who’s at fault, you just want it fixed. But what happens when the situation is more complex and deals with a defect that cost someone their life? Do we pay attention now?

Last Monday, General Motors death toll rose to 21 people resulting from a defect in the ignition switch on older model cars. Although General Motors knew of the ignition switch defect almost a decade ago, they did not take action until recently. The ignition slips to off or accessory, cutting off power to the air bags so they will not deploy during a crash and also cutting electronic steering and braking, causing people to veer off the road. We see that when operation management fails, companies have to have recovery strategies in place. General Motors hired compensation expert Kenneth Fienberg who decide that all passengers, pedestrians, and bystanders who were injured in result to the crash could receive a settlement. In addition, General Motors CEO; Marry Barra fired 15 employees who knew of the defect. Although a great start to reprimanding those who knew of the situation, the company is still being fined $ 35 million by the U.S. Transportation Department for failing to report the need for a recall have an estimated payout of $400 million to compensate victims. Their recovery strategies could have been prevented if their operations team considered ethics.

This reminded me of our paper puppet exercise. Our assembly line created 20 puppets, where process one failed to mention defects in the original paper. As the defected paper continued through the assembly line it was cut, folded, and colored where the defect was not as noticeable anymore. Once it reached our inspection line, many of them did notice. Yes many of us laughed when we found out our assembly line continued to use them, but I don’t think we would laugh if we knew this case could possibly be the outcome.

Who do we blame for the death of these victims? I am sure many of us would say General Motors. Why did they withhold so much information from the public? Why didn’t the National Highway Safety Administration take these claims more serious and open an investigation? Operations management failed, their strategic decision steps failed, and their quality management team did not ensure safety like it should have. As average citizens in society we often accept the answer that something is fixed, but do not care for all the details. This plays into why quality control often lacks ethical standards. We too have to do better.

Before starting this class, I was already aware that forecasting was important. However, I didn’t realize the extent to which it was important. Forecasts drive so many decisions that are made within a company. It is hard to know if you are being too conservative or too ambitious because you never can predict the market. Once you get the forecast, all of the other departments work together to make sure that the numbers are realistic and can make a profit in the end.

I also saw that you can start with one strategy in mind and then you can just end up going in a different direction later on. I was assuming that companies had to stick to the strategy that they intended to start with but that isn’t true. Change is inevitable and you just have to learn to grow with the changing markets.

Amazon is a company that has maintained its strategy for many years. They aim to make their customers as happy as possible and they have done a good job with that. They didn’t follow the Silicon Valley theory where you focus less on revenue and try to establish a product or service. Amazon doesn’t focus on profits, their profit margins aren’t that great but they still have people willing to invest in them. Amazon isn’t worrying about revenues, they are trying to gain more memberships without changing the price to match inflation. Money just doesn’t seem to be a problem for Amazon. They created Amazon Fresh and it just needs to make enough to finance its self. There strategy is proving to work very well for them because they keep adding more services to their business that they really don’t need to finance very heavy. They are able to charge fairly cheap prices for their Kindles because customers will purchase games and applications from the Amazon Kindle store. Their goal is to have their products widely spread across a large number of the population. So far, they have done an amazing job with that.

My team’s strategy was to be a differentiator and lead in the high end and low end. As the simulation progressed, we saw that some of our products in those segments just did not do well. They were positioned in the worst spots in some rounds, some stocked out multiple times, and our awareness of the products fluctuated constantly. It was a true learning experience nonetheless. One thing I learned from this course is that you really have to analyze your competitors very closely and constantly do SWOT analysis to keep your company up to date. I also learned that ethics isn’t always a issue of what is good and bad, it can be about what’s in the best interest of the company. Doing nothing is also an option that can be chosen but it will also have implications in some way.

After being given the task to “create, plan, and execute a fund raising project for a designated charity,” one of the first questions our group asked each other was what charity does our team want to support? In the course of everyday life, this question remains relevant. When a disaster occurs, numerous charities ask for donations to help rebuild a community, friends and family participate in walks or runs in order to raise money for a cause, and solicitations from third parties are abundant. Asking yourself a few simple questions and giving donation parameters can help determine whether the cause or special project is the right place to donate funds. An interesting article in the Washingtonian helped clarify some questions that I have had in the past while donating to a specific cause or charity.

1. Pick a problem you care about- “Whether seasoned or first-time givers, people become consistent donors and take more pride in their gifts when they contribute to an initiative they find important” <http://www.washingtonian.com/>. Small donations pop up throughout the year, but when it comes to a major or annual gift it is important to feel strongly about the cause you are donating to.

2. Decide whether you’d rather invest locally or globally- Multinational charities help those in need all around the world, but the downside is that the results aren’t evident in one’s local community. Both arenas are worthwhile, so the answer to this question depends on the individual donating.

3. Research online- Once you have selected an organization, there are many helpful websites that can provide valuable information and help dig deeper to make sure your funds are being put to use in the most effective way. <http://www.charitynavigator.org/> and <http://www.charitywatch.org/> are good places to start.

4. Look for red flags- A few examples are excessive salaries, revenue or expense projections that greatly deviate from a prior year’s budget, non-diverse revenue sources, and board members who don’t participate by donating to their organization. Non-profits should hold to the same standards as a for-profit organization. If the charity doesn’t seem to track figures or illustrate a level of transparency about funding, it may not be the right direction to take.

5. Call or visit your finalists- Every organization has volunteers that should be able to talk to you about the work the charity does and how it impacts those in need. Smaller organizations may take more time responding to each request, but it is important to know what the goals are of the charity and to see whether they align with the guidelines you feel are important.

6. Get started early- As the year winds down, many people want to donate funds for tax purposes. Make sure to give yourself and the charity enough time to answer your questions without end-of-year pressures.

So far, our group has had an extremely difficult time actually connecting with a representative from our charity. I am the “central region charitable contributions lead” for my corporation, and these communication issues seem to be similar for many charities that my corporation supports. Have you encountered communication barriers while working on this group project? Have you donated to a charity in the past and then found out that they were fraudulent? What other items do you consider while donating funds?

Three weeks ago the Rana Plaza factory building in Bangladesh collapsed, killing 1,127 people. A majority of these were workers producing garments for sale in the United States and Europe. The factory manufactured apparel for brands including Benetton and Walmart among others. An investigation revealed that the building was deemed unsafe just days before the collapse, but factory supervisors ordered their employees to continue working in these hazardous conditions.

The obvious question is why a tragedy like this would occur, even after there had been a forewarning. The answer is because factories like Rana Plaza and others in Bangladesh are under immense pressure to produce a high volume of low-cost garments for their biggest buyers, Walmart, H&M, Inditex (which owns Zara), and Gap to name a few. These companies pride themselves on their ability to get apparel into stores only weeks after designing them. However, this incredible efficiency requires a tremendous amount of manual labor, and no where are labor costs cheaper than in Bangladesh. The massive global supply chains of a majority of apparel manufacturers flow through the South Asian country which trails only China in terms of garments exported. Unfortunately, most of the large Western companies are unaware of the conditions that exist in the factories where their products are being produced.

The latest tragedy has finally caught the attention of European and American companies. This past week H&M, the largest buyer of garments from Bangladeshi factories, agreed to a plan to improve fire and building safety in Bangladesh’s apparel factories. The five-year plan calls for independent safety inspections and for companies to make the findings public. Joining H&M were Inditex, the world’s biggest clothing retailer, and several other European apparel companies. However, PVH, the owner of brands such as Tommy Hilfiger and Calvin Klein, is the only American company that has signed the pact. Companies including Gap, Walmart and JC Penney have considered the plan, but have not yet signed on, mostly due to the cost and how legal issues would be resolved.

I believe this safety pact is a step in the right direction on the road to abolishing subpar working conditions around the world. Therefore, from a management perspective, I think that companies that are not signing the pact, like Walmart and JC Penney, are making a mistake. Not signing sends a negative message to consumers and investors, if the companies are unwilling to spend money to protect human lives customers will question the ethics of the company’s management. Ethics is an important facet of operations management. The managers at American apparel companies need to recognize these issues, like their European counterparts have, and address the dangerous working conditions that exist in their supply chain. I think in the long run the benefits of ensuring safe conditions for all in the supply chain will outweigh the cost.

What is your opinion on the decision of many American companies to not sign the safety pact?

Do you think it is the duty of American companies to ensure the safety of workers in foreign countries?

Would you agree to be recorded while in surgery? Would you agree if you knew that the doctors would take better precautions and be on their best behaviors when they are recorded? The quality of care rises overwhelmingly when doctors know they are being recorded, so why wouldn’t they always be recorded? The article states that doctors follow the hand washing guidelines about 82% more when they are recorded, compared to 7% when the cameras are off. It only makes sense to enact surveillance for all surgeries because the doctors are more inclined to behave better. Just as a retail store or any office behaves better when they know the cameras are on, the doctors do the same. When I think about a hospital I tend to think about how they have higher quality because they are working with sick human beings and these peoples lives are in their hands, but maybe that’s not the case. If I was in surgery I would prefer to have the camera on in order to receive the best quality procedure I could. If my life were in someone else’s hands, I would want the best care in order to come out alive without complications from negligence. Yet there are also the chances that in the course of playing by the book, some miracles would be prevented because doctors are worried about the proper procedures to follow. The precautions that are being looked at are whose going to own the videos, can the surgeon refuse to be recorded, and whether or not surgeries that deal with private areas can be recorded. Doctors disagree to be recorded because of the possibilities of malpractice lawsuits that could be issued.

Besides the quality issue, the article also mentioned the doctors can use the videos as a review for techniques and ways of improvement. When I played sports, the use of video reviews were very helpful. Whether I was reviewing my own techniques or reviewing an upcoming team, I could always learn something new to improve my skills. The videos can also be used as a teaching method for new doctors and students. If the use of cameras equals better quality, I’m all for it. If it’s a matter of patient privacy, then the consent should be put onto the patient and they should be able to choose whether or not to press record.

The topic is interesting and both sides of the argument have valid points. It will be interesting to see what happens in the long run and why they chose it to be that way.

So, let me know what do you think about the quality of hospitals, and would you agree or not agree with the use of cameras?

Fraud, embezzlement, and misuse of funds are some terms that the politically correct like to use. To others its stealing and theft. One of the most important aspects of running a business or corporation is ethics. From the CEO’s, CFO’s and other leadership positions to the lowest ranking employees and customers you serve people have been stealing for ages.

I believe that an honest corporation will draw the interest of honest employees. With a more open and honest culture, management can create a more honest workplace. Now I understand that sometimes no matter how hard a company tries some people will still take what’s not theirs. With the integrity and trust of many corporations in question it’s no wonder so many people steal from companies.

Leading from the front is the first step in preventing a large loss for businesses. With some corporations making an effort of supporting the claim of, “the customer is always right” many companies have to remain vigilant when exchanging checks, money, or merchandise. Scammers have evolved into creative ways of getting away with stealing from businesses. Although I enjoy not having a hassle when correcting an issue businesses must be aware of these scams and check for these fraudulent acts.

By separating a businesses account from an account used only for wire transfers a business can minimize the risk and hassle of being robbed via wire transfers. The extra step of creating more accounts can be a pain in the neck, but minimizing the risk could potentially save the corporation not only peace of mind, but anywhere upwards of millions of dollars. When starting or growing a business startup funds are essential.

A very common practice by scammers these days is phishing. You could only imagine how many people are desperate for startup funds and are more than willing to exchange their information. Once a phisher has their information they can gain access to that business’s accounts and open up other fraudulent accounts and company credit cards in that business’s name. At the end of the day companies should be more cautious when giving out information regardless to how bad they want the funds.

If you’re looking to start a small business it appears it’s not a simple task, and there’s more involved than just simply coming up with a catchy name, selling some product or service, and getting money from the bank. These scammers are pitfalls and must be paid close attention to. Do you think that with all the scams going on in today’s world that small lenders trying to enter a market thrived on by scammers can be successful? Should small businesses stick to the big name lenders to be on the “safe side?” What percentage of businesses costs should be appropriated towards theft and fraud prevention?

They call it weed because it can grow anywhere but it requires rigorous effort.

Making a legitimate business out of marijuana requires high labor costs and extreme costly maintenance. Hundreds of Medicinal Marijuana Entrepreneurs have gone under because of competition or cost. The CEO of Pink House Blooms, Elliot Klug (pictured above) explains, “In order to survive in any business, you’ve got to be cost effective, so that was one of our drivers.”

Pink house and other commercial growers are required to document the life of each plant from the time it’s a cutting to the time its flowers are sold and the state of Colorado requires cameras in every room that has plants to prevent marijuana from entering the black market. These extra requirement are not comparable to any other industry or cheap either.

The Marijuana flower is trimmed by hand because the machine would damage their Trichomes, the part of the plant that is rich in the high-inducing THC. This results in high labor costs. Payroll can make up more than a third of production costs. Retaining employees who learned their trade by growing clandestinely, is also a challenge because “they aren’t used to being part of a regular society”, says Jason Katz, chief operating officer of Local Product of Colorado.

Growing space can cost $100 or more per square foot and Pink House Blooms has a 6000 square foot warehouse. To have operation costs as inexpensive as possible they use every inch of their warehouse. To save on air conditioning costs, Pink house developed a system that uses water to cool the powerful lights that make marijuana grow. Those lights, causing a $14,000-a-month electric bill, are on 24/7 making their electricity bill a huge portion of their expenses and preventing the company from paying back the borrowed money.

The employees may have gauges and there are Pink Floyd posters covering the walls but it is not as mellow as one would think, It is a tough business. They have supplier issues because many companies do not want to be associated with a pot-growing business.

Is this still a touchy subject or is there something operations managers do to convince suppliers to work with them?

Operations Management for this industry is not typical at all. They have to create new equipment specialized for their product because it cannot be found on the shelf. This business could have high costs because it is relatively new.

Is it possible that over time, operation managers will find better ways to lower their costs? Any specific ideas?

Colorado and Washington has approved the use of Marijuana for Medicinal use and recreational use effect by next year. Will a higher demand leading to higher profits make it possible for these companies to increase production efficiency?

What methods might this industry use to forecast. Why might the naive approach lead to too much forecasting error?

Are ethical dilemmas an issue for operational management? If your answer is no, you are wrong. There are many ethical dilemmas that companies face each day regarding their operations. This Bloomberg article regarding an ethical decision needed to be made by Tokyo Electric Power Company (or ‘TEPCO’) , a Japanese electric utility company, is ground shaking with the large implications that will result per their ultimate decision.

From within the seven pits, leaks were found in the basements from when the disaster teams were called in to cool down the reactors. The company is now under pressure because it may be forced to dump the radioactive water in the Pacific Ocean.

Time is of the essence due to the water busting through basement walls at roughly 400 tons per day. This water is then becoming contaminated, thus a huge issue.

TEPCO has two operational decisions to make to pass down to its work crew: reduce radiation levels from the water by pouring it into the Pacific Ocean or continue their production of “above-group storage tanks”.

Why such a tough decision for management? It is essentially impossible to keep up with the inflow of water that is leaking. Even with production of 450,000 tons of the tanks above ground by September 2013 and 700,000 tons by the middle of 2015 this company clearly is fighting an uphill battle.

What are the effects of their decisions? Well, an important factor in this are human lives. The United Nations Scientific Committee on the Effects of Atomic Radiation (or ‘UNSCEAR’ link to their website here –> http://www.unscear.org/) has remarked that humans can get cancer, such as leukemia, with moderate to high levels of exposure to the toxins.

Even though TEPCO is working on the removal of many of the radioactive substances, the purification system they have created continues to see operational issues in functioning properly. The company’s image continues to be at stake, they face legal issues, disrupting the fishing industry, and their company’s attractiveness to investors in the future. Other than the business side, their obligated to think of their own people as in their workers and also those people that this could affect.

The original cause of the leaks could have potentially been a flaw in the staffs proper inspection of the equipment and additional tests before dumping toxic water into the leaking pits.

This is an operational nightmare for TEPCO. I feel that this story directly related to what we have already learned within class. Within the puppet making exercise the workers continued to feel pressured by upper management to just get the job done. Also, within the tower exercise having an effective team leader was crucial along with the planning phase of construction.

I am curious to hear your thoughts on what truly caused these leaks and what you would do in this situation.

Social media became heavily popular in the early 2000’s when MySpace, Facebook, LinkedIn, and Friendster were launched. These sites allowed users to communicate in other ways besides email. Today, there are tons of different kinds of social networking websites. However, Facebook, Twitter, and Google remain of the most popular. These networking sites allow users to communicate in different ways. Google focuses more on email and/or chat, while Facebook and Twitter allow users to communicate with one another with “statuses” and “tweets,” respectively. These social media sites recently took it a step further and introduced ways of tweeting and messaging after death. By allowing this to happen, are companies just really desperate to keep their social media outlets buzzing with posts from the dead?

Google introduced the Google Inactive Account Manager or what it has been called lately, “Google Death Manager.” Those that are heavily involved with social media accounts probably have wondered what happens to their account after they pass. Google has a plan for those that care what will happen to their Google services such as Gmail, Blogger, Google Drive, Google+, Google Voice, and so on. Basically, you have two choices. You can either either pass on your “digital life” to someone you trust, or you can simply set up a time of inactivity. You can choose from one, three, six, nine, or 12 months. If you happen to not login in the certain amount of time you chose, then Google will either contact/alert 10 of your trusted contacts (and share your data with them) or you can simply have it set up to delete your account. Personally, I think this is not a bad idea at all. If someone disappears or dies suddenly, maybe there is information in their Google account that will help solve the case. I support privacy in every aspect all the way, but this can really help in a time of need.

Next, Facebook has introduced an app called “Ifidie” that allows users to send messages to your friends after your death. I believe the If I die app is a bit too much. The Facebook administraters post a public Facebook message or send out private message to specific people. The admin are allowed to do this once at least three of the trusted friends you choose report your death to the Facebook service. I understand we are in the digital era, however, I believe this is just too much. Again, is this to keep the buzz going?

Twitter has also introduced social media after death with _LivesOn. This is a tool that monitors your Twitter habits and patterns then after your death, it will continue Tweet for you.

Perhaps social networking after death is for those who are more comfortable with death. Personally, I think these companies are trying to get the buzz however they can. Would you like to be active on social media even after your death?